Sumitomo matches Actis offer for Swaraj Mazda

Sabarinath M & Lijee Philip, TNNMay 19, 2005, 01.27AM IST

MUMBAI: The battle for Swaraj Mazda is hotting up. Japanese major Sumitomo Corporation is understood to have made an offer of Rs 400 per share to buyout a part of Punjab Tractor's stake in the light commercial vehicle maker.

The proposed offer from the Japanese company matches the price at which private equity player Actis recently made an open offer for an additional 25% stake in Swaraj Mazda.

Sumitomo, which made its intention to up its stake in Swaraj Mazda even when the open offer of Actis was on, is believed to have conveyed the offer price to the Punjab Tractor management recently.

Sources said Punjab Tractor managing director Yash Mahajan — who is also the CEO of Swaraj Mazda — is visiting Japan shortly to discuss the matter with the Sumitomo management.

A senior executive from Swaraj Mazda's finance department is expected to accompany Mr Mahajan to Japan. When contacted, Mr Mahajan refused to comment on the issue. Sources said top officials from Swaraj Mazda had its first round of discussions with the Sumitomo Management in Mumbai.

Sumitomo had expressed its intention to raise its stake in Swaraj Mazda in January. Sumitomo directly owns a 10.4% equity in Swaraj Mazda. Actis has opposed Sumitomo's bid to increase stake in Swaraj Mazda. Punjab Tractors, which owns a 29% stake in Actis, is considering selling part of its stake ostensibly to back Sumitomo to gain control over Swaraj Mazda.

Actis has received a lukewarm response to its open offer to pick up a 25% stake in Swaraj Mazda. Actis has managed to raise its stake in the firm to close to 18% through the open offer.

This development comes at a time when the company's technical collaboration with Mazda Corporation of Japan has expired. So the company management is believed to have approached Sumitomo to take a lead in supporting the company's future product development programme.

If the selloff proposal goes through, Sumitomo would emerge as the largest shareholder in Swaraj Mazda with a shareholding of about 25.4%, as it already has a 10.41% holding in the company.